Some of it, yes.
A founder who leaves a business does not have to forget what they have learnt while building it. Their experience, market knowledge and general skills go with them. The difficulty comes with information that belongs to the business rather than simply forming part of somebody’s experience.
Consider a founder who has spent several years developing a product, speaking to customers and helping to shape the commercial strategy. After leaving, they start a new venture in the same field. The former company then learns that they are speaking to some of the same customers and may still have copies of technical material, pricing information or internal plans. At that point, the distinction between personal know-how and confidential business information becomes important very quickly.
What is the business actually trying to protect?
Confidential information can take many forms. Customer requirements, detailed pricing, product roadmaps, unpublished strategy, technical specifications and commercially sensitive financial information may all require protection, depending on the circumstances.
The practical problem is that smaller and founder-led businesses do not always identify that information clearly while relationships are good. Documents are shared widely, access remains open for convenience and contracts may contain broad confidentiality wording without saying much about the information that is genuinely sensitive.
It is worth dealing with that while the business is growing. Founder agreements, service agreements and consultancy arrangements should be consistent about confidentiality and intellectual property, and access to sensitive information should reflect what people actually need for their role.
If concerns arise after departure
The first task is to establish what has happened before deciding how strongly to respond. What information did the founder have? Was anything downloaded, forwarded or copied shortly before departure? What do the relevant agreements say, and is there evidence that the information has been used or disclosed?
A measured response is often more effective than an immediate accusation. Sometimes a clear reminder of continuing obligations is enough. In other cases, undertakings may be appropriate. Where there is a real risk of confidential material being disclosed or used to the company’s detriment, urgent legal action may need to be considered.
For an innovation-led business, the better question is usually not what can be done after a founder leaves, but whether the company could identify and protect its most valuable information before anyone is thinking of going.
Accurate at the time of writing. This information is provided for general information purposes only and should not be relied upon as legal advice.
